Official Receiver v Tailby

JurisdictionUK Non-devolved
Date1886
Year1886
CourtHouse of Lords
[HOUSE OF LORDS.] EDWARD TAILBY APPELLANT; AND THE OFFICIAL RECEIVER (TRUSTEE OF THE PROPERTY OF H. G. IZON, A BANKRUPT) RESPONDENT. 1888 July 30. LORD HERSCHELL, LORD WATSON, LORD FITZGERALD, and LORD MACNAGHTEN.

Bill of Sale - After-acquired Property, Assignment of - Chose in Action - Assignee, Title of - Future Book Debts - Specific Performance.

A bill of sale assigned (inter alia) all the book debts due and owing or which might during the continuance of the security become due and owing to the mortgagor:—

Held (Lord FitzGerald neither assenting nor dissenting), that the assignment of future book debts, though not limited to book debts in any particular business, was sufficiently defined and passed the equitable interest in book debts incurred after the assignment, whether in the business carried on by the mortgagor at the time of the assignment or in any other business.

The decision of the Court of Appeal (18 Q. B. D. 25) reversed, and the decision of Hawkins and Mathew JJ. (17 Q. B. D. 88) restored.

Belding v. Read (3 H. & C. 955) and In re D'Epineuil (20 Ch. D. 758) overruled. In re Clarke, Coombe v. Carter (36 Ch. D. 348) approved.

APPEAL from a decision of the Court of AppealF1.

By a bill of sale made the 13th of May 1879 H. G. Izon, described as a packing case manufacturer of 87 Parade, Birmingham, assigned to Tyrell for valuable consideration (inter alia) “all and singular the stock-in-trade, fixtures, shop and office furniture, tools, machinery, implements and effects now being or which during continuance of this security may be in upon or about the premises of the said mortgagor situate at 87 Parade aforesaid or any other place or places at which during the continuance of this security he may carry on business …. And also all the book debts due and owing or which may during the continuance of this security become due and owing to the said mortgagor, which fixtures, stock-in-trade, machinery, furniture, chattels, goods, effects and debts are for the most part and as near as may be mentioned in the respective schedules hereunder written.” In November 1884, Tyrrell having died, his executors assigned to Tailby, the present appellant, certain book debts (specified in a schedule) owing to Izon, and among them a debt of about £11 which had become due to him from Wilson Brothers & Co. since the bill of sale, and due notice of this assignment was thereupon given to Wilson Brothers & Co.

In December Izon became bankrupt. In January 1885 and after the adjudication in bankruptcy Wilson Brothers & Co. paid to Tailby the debt above-mentioned. The official receiver in Izon's bankruptcy afterwards sued Tailby in the County Court of Warwickshire for the amount of the debt as money had and received.

The county court judge gave judgment for the plaintiff on the ground that the assignment of future book debts generally, without any delimitation as to time, place, or amount, was too vague to be supported.

The Queen's Bench Division (Hawkins and Mathew JJ.) reversed this decision and entered judgment for the defendantF2. That judgment was reversed by the Court of Appeal (Lord Esher M.R. Lindley and Lopes L.JJ.) who restored the judgment for the plaintiffF3.

Against this judgment Tailby appealed.

April 17, 19, 20. Finlay Q.C. and J. V. Austin for the appellant:—

There is no such general doctrine with regard to vagueness as was held in the Court of Appeal. Reading the description as including all future debts in any business carried on anywhere, this assignment is valid. Where the consideration has passed a Court of Equity will restrain the grantor from making away with or dealing with the property in a way inconsistent with the charge, provided the description is so clear and definite that the Court can identify the property when it comes into existence. There is no rule of law or equity which prevents the covenant from attaching when the property comes into existence. The Court of Appeal said specific performance could not be granted; but this is erroneous; see per Lord Cranworth in Hoare v. DresserF4 as to where equity will interfere. At common law no doubt a man could not grant what he had not: Perkins' Profitable Book (translated, 1642) where the doctrine is stated in all its crudity. But the principles on which equity will enforce the assignment as a contract, are clearly laid down in the judgment of the Court of Appeal in In re Clarke, Coombe v. CarterF5, where Cotton, Bowen and Fry L.JJ. having before them the decision of the Court of Appeal in the present case declined to follow it. Indeed the two cases are irreconcilable. The decision in Holroyd v. MarshallF6 is strongly in favour of the appellant, but some of Lord Westbury's dicta (which were not necessary for the decision) have been misunderstood and led to error, e.g. in Belding v. ReadF7, and In re D'EpineuilF8, which ought to be overruled. In Greenbirt v. SmeeF9 Bramwell B. is reported to have said during the argument, “If Holroyd v. MarshallF6 is to be taken to be an authority, I am afraid that Belding v. ReadF7 is not one.” Lord Westbury has been supposed to have laid it down that there could not be an assignable title to goods which were undetermined. His observations must be read secundum subjectam materiem, and clearly do not apply to property to come into existence at a future time. Two things have been confused: vagueness of description, and too great wideness. If the description is so vague that the property cannot be identified the contract of course cannot be enforced, as in Pearce v. WattsF10; see also Chattock v. MullerF11. Also if it is so wide as to be against public policy, e.g. where a debtor assigns all his property, the Courts have held the contract void. But neither of these objections applies here. Property to be acquired in future is assigned every day in marriage settlements, and without objection. The cases on this subject are referred to in Coombe v. CarterF12. There are other authorities which support the appellant's contention: Bennett v. CooperF13, per Lord Langdale; Harrington v. KloproggeF14, where an assignment of the profits of all offices or pensions of which the defendant might become possessed was held valid by Lord Mansfield: Leatham v. AmorF15 and Lazarus v. AndradeF16, both following Holroyd v. MarshallF17; Ex parte GamesF18; Collyer v. IsaacsF19, per Jessel M.R.; and Clements v. MatthewsF20, where an assignment of future crops was held valid. In Bloomer v. Union Coal and Iron CompanyF21 an assignment of future book debts was held valid by Bacon V.C.

[LORD MACNAGHTEN referred to Mornington v. KeaneF22; and Fothergill v. RowlandF23, per Jessel M.R.]

Sir Richard Webster A.G. and M. Muir Mackenzie for the respondent:—

Under the bankruptcy things in action pass to the trustee in bankruptcy: Bankruptcy Act 1883 (46 & 47 Vict. c. 52) s. 50 sub-s. 5. The respondent is therefore primâ facie entitled to this book debt. Of future book debts there can be no assignment, nothing more than a covenant to assign. If the bankruptcy had happened before the debt came into existence it would not be denied that the trustee was entitled: Collyer v. IsaacsF19 per Jessel M.R.: “A man cannot in equity, any more than at law, assign what has no existence.” How far has equity gone in enforcing such a covenant to assign? The argument on the other side amounts practically to saying that there is no limit to the power to assign future acquired property, but the authorities, beginning with Holroyd v. MarshallF17 clearly establish that there is some limit to the effect equity will give to such assignments. The description of the subject-matter in Holroyd v. MarshallF17 was sufficiently precise — machinery that might be placed in a certain mill. The present case is very different: it includes all book debts in any business carried on anywhere, and even debts which were not entered in books, but which might or ought to have been. No decision has gone so far as this. Clements v. MatthewsF24 is not against the respondent; the subject-matter was real estate: growing crops being part of the inheritance and in a different position from that of mere chattels, as pointed out by Cotton L.J. Equity cannot decree specific performance of that which is not certain and specific and cannot become so. Tried by that test the description is too vague for the Court to give specific performance. This is the true test as laid down by Lord Westbury in Holroyd v. MarshallF25 and adopted in Belding v. ReadF26 per Bramwell B., and In re D'EpineuilF27. In considering whether the description is specific enough a Court of Equity looks at it as at the date of the assignment and not when the property comes into existence.

Finlay Q.C. in reply:—

A description is too vague only if the Court cannot see what the parties intended to deal with. There is no difference in the description required of things in action then in existence and of those not then in existence. A description may be precise and yet in one sense vague: e.g. “my ten shares in the L. Railway.” The Court would not prevent the grantor dealing with any particular shares out of 100 held by him. A description of “all my shares in the L. Railway” though more wide would be less vague, and equity could restrain the grantor from dealing with any of them, and that is precisely the present case. But secondly, the appellant does not need the assistance of a Court of Equity. There has been a novus actus interveniens: the appellant has got possession of the thing in action and seeks only to retain it, not to take it from some one else. This gets rid of the difficulty suggested about specific performance — if there be a difficulty.

The House took time for consideration.

July 30. LORD HERSCHELL: —

My Lords, the short point to be determined in this case is whether an assignment by way of security of certain book debts not existing at the time of the assignment was valid, so as to give the assignee a good title to them...

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4 books & journal articles
  • THE (QUISTCLOSE) RESULTING TRUST AS A PROPRIETARY RESPONSE TO UNJUST ENRICHMENT
    • Singapore
    • Singapore Academy of Law Journal No. 2014, December 2014
    • 1 December 2014
    ...of individual will by autonomous individuals contracting for their own self-benefit. See Edward Tailby v The Official Receiver(1888) 13 App Cas 523 at 545, where Lord Macnaghten famously proclaimed that: … [b]etween men of full age and competent understanding ought there to be any limit to ......
  • OF PROHIBITIONS ON ASSIGNMENTS, RESTRICTIVE COVENANTS AND NEGATIVE PLEDGES IN COMMERCIAL LAW: CLOGS ON COMMERCE
    • Singapore
    • Singapore Academy of Law Journal No. 1994, December 1994
    • 1 December 1994
    ...with valuable consideration; nor unconditional agreements in the absence of valuable consideration. 104 Tailby v Official Receiver (1888) 13 App Cas 523. See also PS Atiyah, The Sale of Goods (1990, 8th ed) at 317. Cf Re Wait[1927] 1 Ch 606. Although it may be that where consideration is fu......
  • Equity and Trust
    • Singapore
    • Singapore Academy of Law Annual Review No. 2002, December 2002
    • 1 December 2002
    ...two different types of contracts. This distinction is in turn drawn primarily from the leading case of Tailby v Official Receiver(1888) 13 App Cas 523, which is the authority cited by Sir Frederick Jordan, where Lord Macnaghten famously refused to apply principles applicable to executory co......
  • QUASI-SECURITY INTERESTS IN LOAN AGREEMENTS: AN OVERVIEW1
    • Singapore
    • Singapore Academy of Law Journal No. 1993, December 1993
    • 1 December 1993
    ...and Union Bank of England v. Charnley[1924] 1 K.B. 431, 445. Also see Holroyd v. Marshall, ibid.; Tailby v. Official Receiver(1888) 13 App. Cas. 523. 87. Tailby v. Official Receiver, ibid., at p. 529. 88. Goode, Legal Problems of Credit and Security, at p. 20. 89. Stone, “The ‘Affirmative’ ......

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